based on the following data: Page 136 Chapman Company obtains 100 percent of Abernethy Company's stock on January I, 2020. As of that date, Abernethy has the following trial balance: Debit Credit Accounts payable $ 50,000 Accounts receivable $ 40,000 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 120,000 Cash and short-term investments 60,000 Common stock 250,000 Equipment (net) (5-year remaining life) 200,000 Inventory 90,000 Land 80,000 Long-term liabilities (mature 12/31/23) 150,000 Retained earnings, 1/1/20 100,000 10,000 Supplies Totals $600,000 $600,000 During 2020, Abernethy reported net income of $80,000 while declaring and paying dividends of $ 10,000. During 2021, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000. LO 3-30 1. Assume that Chapman Company acquired Abernethy's common stock for $490,000 in cash. As of January 1, 2020, Abernethy's land had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021.
based on the following data: Page 136 Chapman Company obtains 100 percent of Abernethy Company's stock on January I, 2020. As of that date, Abernethy has the following trial balance: Debit Credit Accounts payable $ 50,000 Accounts receivable $ 40,000 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 120,000 Cash and short-term investments 60,000 Common stock 250,000 Equipment (net) (5-year remaining life) 200,000 Inventory 90,000 Land 80,000 Long-term liabilities (mature 12/31/23) 150,000 Retained earnings, 1/1/20 100,000 10,000 Supplies Totals $600,000 $600,000 During 2020, Abernethy reported net income of $80,000 while declaring and paying dividends of $ 10,000. During 2021, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000. LO 3-30 1. Assume that Chapman Company acquired Abernethy's common stock for $490,000 in cash. As of January 1, 2020, Abernethy's land had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021.
Chapter7: Corporations: Reorganizations
Section: Chapter Questions
Problem 42P
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Question
Transcribed Image Text:rroDiems 19 through 21 should be viewed as independent situations. They are based on the following data:
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has
the following trial balance:
Page 136
Debit
Credit
Accounts payable
$ 50,000
Accounts receivable
$ 40,000
Additional paid-in capital
Buildings (net) (4-year remaining life)
50,000
120,000
Cash and short-term investments
60,000
Common stock
250,000
Equipment (net) (5-year remaining life)
Inventory
200,000
90,000
Land
80,000
Long-term liabilities (mature 12/31/23)
150,000
Retained earnings, 1/1/20
100,000
Supplies
10,000
$600,000
$600,000
Totals
During 2020, Abernethy reported net income of $80,000 while declaring and paying dividends of $ 10,000. During 2021, Abernethy
reported net income of $110,000 while declaring and paying dividends of $30,000.
LO 3-3a
1. Assume that Chapman Company acquired Abernethy's common stock for $490,000 in cash. As of January 1, 2020, Abernethy's land
had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. Chapman uses the
equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021.
LO 3-3b
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